Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 47P
To determine
Prepare a four-column proof of cash in good form for Company R for the month of April 20X0.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
b) You are the audit senior in charge of the audit of Malaika Company and have been informed by your audit manager that during the year a fraud occurred at the client. A payroll clerk set up fictitious employees and the wages were paid into the clerk’s own bank account. This clerk has subsequently left the company, but the audit manager is concerned that additional frauds have taken place in the wages department.
Required:
i) Describe six procedures which should be undertaken during the audit of wages as a result of the manager’s assessment of the increased risk of fraud.
You are the audit senior in charge of the audit of Malaika Company and have been informed by your audit manager that during the year a fraud occurred at the client. A payroll clerk set up fictitious employees and the wages were paid into the clerk’s own bank account. This clerk has subsequently left the company, but the audit manager is concerned that additional frauds have taken place in the wages department. Required: i) Describe six procedures which should be undertaken during the audit of wages as a result of the manager’s assessment of the increased risk of fraud.
You are the in-charge auditor examining the financial statements of the Gutzler Company for the year ended December 31. During late October, with the help of Gutzler’s controller, you completed an internal control questionnaire and prepared the appropriate memoranda describing Gutzler’s accounting procedures. Your comments relative to cash receipts are as follows:∙ All cash receipts are sent directly to the accounts receivable clerk with no processing by the mail department. The accounts receivable clerk keeps the cash receipts journal, prepares the bank deposit slip in duplicate, posts from the deposit slip to the subsidiary accounts receivable ledger, and mails the deposit to the bank.∙ The controller receives the validated deposit slips directly (unopened) from the bank. She also receives the monthly bank statement directly (unopened) from the bank and promptly reconciles it.∙ At the end of each month, the accounts receivable clerk notifies the general ledger clerk by journal…
Chapter 10 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prepare an example of lapping of cash receipts,...Ch. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Explain two procedures by which auditors may...Ch. 10 - Prob. 18RQCh. 10 - Prob. 19RQCh. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Prob. 22RQCh. 10 - Prob. 23RQCh. 10 - Prob. 24RQCh. 10 - Prob. 25RQCh. 10 - Prob. 26QRACh. 10 - Henry Mills is responsible for preparing checks,...Ch. 10 - During the first few months of the year, John...Ch. 10 - Prob. 29QRACh. 10 - Prob. 30QRACh. 10 - Prob. 31QRACh. 10 - Prob. 32QRACh. 10 - Prob. 33QRACh. 10 - Prob. 34QRACh. 10 - Prob. 35QRACh. 10 - Prob. 36QRACh. 10 - Prob. 37QRACh. 10 - Select the best answer for each of the following...Ch. 10 - Prob. 38BOQCh. 10 - Prob. 38COQCh. 10 - Prob. 38DOQCh. 10 - Prob. 38EOQCh. 10 - Prob. 38FOQCh. 10 - Reconciliation of the bank account should not be...Ch. 10 - The auditors suspect that a clients cashier is...Ch. 10 - Prob. 38IOQCh. 10 - Prob. 38JOQCh. 10 - Prob. 38KOQCh. 10 - Prob. 38LOQCh. 10 - Which of the following represents a correct...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Prob. 39DOQCh. 10 - Prob. 39EOQCh. 10 - Prob. 39FOQCh. 10 - Prob. 40OQCh. 10 - Prob. 41OQCh. 10 - Prob. 42OQCh. 10 - Prob. 43OQCh. 10 - Prob. 44OQCh. 10 - Prob. 45OQCh. 10 - Prob. 46PCh. 10 - Prob. 47PCh. 10 - Prob. 48PCh. 10 - Prob. 49PCh. 10 - Prob. 50ITCCh. 10 - Prob. 51ITCCh. 10 - Prob. 52RDCCh. 10 - Prob. 53EC
Knowledge Booster
Similar questions
- You are an audit supervisor in Misso & Co, an audit firm. Your audit team has been assigned to perform the audit on sales and other income for a client, Dimmy Sdn. Bhd. (Dimmy). You are given four audit trainees to assist you in completing the audit on cash and bank. In addition, you are also required to audit on the receivables account of Dimmy.(a) Explain ANY FIVE (5) types of procedures that an auditor can perform to obtain audit evidence and provide an example for each type of procedure.arrow_forwardAssume that you have audited accounts receivable as of 12/31/2020 and are confident that the ending balance should be $7,188,000. Further, you know that the audited balance as of 12/31/2019 was $8,462,000. You also verified cash deposits from customers through a review of the bank account. Based on that review you believe that cash receipts from customers ranges from an amount of $40,000,000 to $41,000,000. Which amount below would represent an overstatement of revenue for the year ending 12/31/2020, based on the facts above? 1. $38,500,000 2. $41,000,000 3. $39,762,000 4. $39,100,000arrow_forwardThe auditor of Cubs obtained the following client-prepared bank reconciliation (See Image) The following information is available: Evan Monroe was promoted to controller on December 15, year 2; his former position was assistant controller—fixed assets. Evan Monroe has his personal bank accounts with First Bank of Munich. Joe Smith was hired on December 1, year 2, as a staff accountant. Joe Smith’s prior job was with First Bank of Munich. Cubs expects the year-end close to be complete on January 6, year 3. The adjustments on the bank reconciliation were booked on January 30, year 3. Required: In the table below, identify six potential issues that the auditor might have when examining the bank reconciliation prepared by Cubs from the list provided of potential issues. An issue may be used once or not at all. Reconciliation is not mathematically accurate. Reconciliation balance was not properly agreed to the December 31 general ledger balance.…arrow_forward
- You are testing the controls over bank accounts for your audit client, Orleans Ltd. You note that the responsibility for bank reconciliations has changed due to a corporate reorganisation halfway through the current financial year. Both the staff member performing the bank reconciliations and the supervisor have changed. You are able to talk to only the current staff member and supervisor because the other staff took voluntary redundancies and left the client’s employment six months ago. Required: (a) What techniques are available to you to gather evidence about the bank reconciliations? Explain how you would use each technique and comment on the quality of the evidence obtained from each . (b) When you ask the employees responsible for bank reconciliations about how they perform the reconciliations there is a possibility that they will not tell the whole truth about their performance of the reconciliations. Given this, will you bother to ask them? Explain (c) Explain the impact of…arrow_forwardYou are testing the controls over bank accounts for your audit client, Orleans Ltd. You note that the responsibility for bank reconciliations has changed due to a corporate reorganization halfway through the current financial year. Both the staff member performing the bank reconciliations and the supervisor have changed. You are able to talk to only the current staff member and supervisor because the other staff took voluntary redundancies and left the client’s employment six months ago. Required: (a) What techniques are available to you to gather evidence about the bank reconciliations? Explain how you would use each technique and comment on the quality of the evidence obtained from each (b) When you ask the employees responsible for bank reconciliations about how they perform the reconciliations there is a possibility that they will not tell the whole truth about their performance of the reconciliations. Given this, will you bother to ask them? Explain (c) Explain the impact of the…arrow_forwardAs one of the year-end audit procedures, the auditor instructed the client's personnel to prepare a confirmation request for a bank account that had been closed during the year. After the client's treasurer has signed the request, it was mailed by the assistant treasurer. What is the major flaw in this audit procedure? a. The confirmation request was signed by the treasurer. b. Sending the request was meaningless because the account was closed before the year end. c. The request was mailed by the assistant treasurer. d. The CPA did not sign the confirmation request before it was mailed.arrow_forward
- You are auditing the Digos People’s Cooperative with a substantial annual sales, all of which are billed and collected locally. During your preliminary review of internal control, you discover the following procedures for handling cash receipts: Cash collections on over-the-counter and COD sales are received by the cashier from the customer or from the delivery service. Upon receiving cash, the cashier stamps the sales ticket “paid” and files a copy. The only record of COD sales is a copy of the sales ticket, which is given to the cashier to hold until cash is received from the delivery service. Mail is opened by the credit manager’s secretary, and remittances are given to the credit manager for review. The credit manager then places the remittances in a try on the cashier’s desk. At the time of the daily deposit – called “deposit cutoff time” – the cashier delivers the checks and currencies to the assistant credit manager, who prepares remittance lists and the bank deposit, and…arrow_forwardWhich of the following circumstances would most likely cause an audit team to performextended procedures?a. Supporting documents are produced when requested.b. The client made several large adjustments at or near year-end.c. The company has recently hired a new chief financial officer after the previous oneretired.d. The company maintains several different petty cash fundsarrow_forward3DD Corporation engaged your service to audit its account. In your examination of cash, you find that the Cash account represents both cash on hand and cash in bank. You further noted that there is very poor internal control over cash. Your audit covers the period ended December 31, 2017. You made a cash account on January 15, 2018, and cash on hand in this date was determined to be P52,000. Examination of cashbooks and other evidences of transaction disclosed the following: a. January 1 through 15, 2018 collections per duplicate receipts, P199,000. b. Total duplicate deposit slips, all dated January 2 through 15, P110,000, includes a deposit representing collections of December 31 c. Cash book balance on December 31, 2017 is P465,000, representing both cash on hand and cash in bank. d. Bank statement for December shows a balance of P424,000. e. Outstanding checks at December 31: Number 183 4,500 Number 254 4,000 Number 198 12,500 Number 280 52,000…arrow_forward
- ABC Manufactures is a manufacturing company, and your audit team is conducting the annual audit of its financial statements. As part of the audit procedures, you are tasked with testing the accounts receivable balance. ABC Manufactures has a significant accounts receivable balance owing to its diverse customer base. Upon initiating the audit procedures, your team sends out accounts receivable confirmations to one of ABC Manufactures largest customers with a material accounts receivable balance outstanding. However, several weeks have passed, and the confirmation has not been returned. The audit team has made follow-up attempts via phone calls and emails, but there has been minimal response. Considering the lack of responsiveness, the audit team is becoming increasingly skeptical about the effectiveness of the confirmation process in this particular situation. Describe two alternative audit procedures that the audit team may conduct that may assist them in gathering sufficient…arrow_forward3DD Corporation engaged your service to audit its account. In your examination of cash, you find that the Cash account represents both cash on hand and cash in bank. You further noted that there is very poor internal control over cash. Your audit covers the period ended December 31, 2017. You made a cash account on January 15, 2018, and cash on hand in this date was determined to be P52,000. Examination of cashbooks and other evidences of transaction disclosed the following: a. January 1 through 15, 2018 collections per duplicate receipts, P199,000. b. Total duplicate deposit slips, all dated January 2 through 15, P110,000, includes a deposit representing collections of December 31 c. Cash book balance on December 31, 2017 is P465,000, representing both cash on hand and cash in bank. d. Bank statement for December shows a balance of P424,000. e. Outstanding checks at December 31: Number 183 4,500 Number 254 4,000 Number 198 12,500 Number 280 52,000…arrow_forwardBrylle is one of the auditors of Alejandria Corporation (AC). He was assigned to test the controls over the cash of Alejandria. The accountant of AC prepares monthly bank reconciliation through the use of Microsoft Excel. Brylle wanted to know if the final amounts in the bank reconciliation are correct.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning